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Ford feels heat to refresh lineup

From detnews| April 27,2007

To survive in today's auto industry, you need a steady parade of fresh designs to keep consumers interested.

Ford Motor Co. learned that the hard way by allowing initially successful models like the Taurus and Ranger to languish too  long without a significant refresh.

Today, it has the oldest lineup of any major automaker.

Ford is trying to change that. By 2010, it expects to have one of the freshest vehicle lineups. But after losing $12.7  billion last year and borrowing against nearly all of its assets to finance the turnaround plan, the question is whether Ford  can survive long enough to see the product renaissance.

An analysis by J.D. Power and Associates for The Detroit News of the first three months of 2007 illustrates how Ford's aging  lineup is undermining its efforts in showrooms across the country.

New models like the Fusion sedan and Edge crossover are not only selling well, but also bringing in new buyers to Ford.

But its aging vehicles like the Explorer SUV and the Focus sedan are losing sales and driving consumers to competing brands  in alarming numbers.

According to J.D. Power, 58.5 percent of those who bought a Ford already owned a Ford, while only 42 percent of those who  traded in a Ford bought another Ford.

That means most people buying Fords are already Ford customers, but nearly half of those trading in Fords are defecting to  other brands.

The problem is shared by Ford's Detroit-based rivals, but the gap is greatest at Ford.

The reverse, however, is true for Toyota Motor Corp. Only 35.8 percent of Toyota buyers in the first quarter were return  Toyota customers, yet 58.5 percent of those who traded in Toyotas bought another one.

Analysts say the problem is U.S. automakers have older fleets than their Japanese competitors -- and, at 3 1/2 years on  average, no lineup is older than Ford's, according to a 2006 comparison of the average age of automakers' fleets by  investment firm Merrill Lynch.

"They've had some great launches," said Erich Merkle, with consultant IRN Inc. in Grand Rapids. "It's still not enough to fix  some of the problems of the past. Ford needs a pretty good turnover in a number of their vehicles, and they need it pretty  fast."

Cisco Codina, Ford's head of North American sales and marketing, said Ford is working on the age problem. By 2008, 70 percent  of Ford's lineup will be new or recently refreshed. By decade's end, Ford will have replaced or refreshed every vehicle in  its fleet.

"We're at a crossroads," Codina said. "When you're in the middle of a plan, nothing looks really good."@@page@@

Consumers are impressed

Ford's newest products appear to be impressing consumers.

The Fusion, launched in late 2005, is heavy on chrome with an aggressive stance. The look was conceived as the antidote to  years of lackluster designs that, combined with checkered reliability ratings, drove consumers away.

The Fusion has matched such models as the Toyota Camry and Honda Accord in initial reliability surveys. Consumer Reports  magazine called it the most impressive new car for 2007.

Ed Miller took notice.

In 2005, the 24-year-old Warren man traded in his Ford Escort for a Camry. He felt guilty about buying a foreign car, but his  friends touted the Toyota's reliability. Miller liked the Camry, but was not overly impressed. When he saw the Fusion, he  went back to Ford.

"I loved the new design," Miller said. "I'm pushing it on everybody I meet."

Through March, Fusion sales are up 32.9 percent over last year. Moreover, more than half of Fusion buyers were new to Ford,  while 69.7 percent of those who traded in Fusions bought another Ford.

"That retention rate is extremely high," said Tom Libby, an analyst with J.D. Power's Power Information Network in Troy.

The numbers tell a different tale about older models like the Explorer. The Explorer filled Ford's coffers during the 1990s,  when SUVs were the rage. It was refreshed for 2006, but not enough to hide that it is an aging vehicle in a shrinking  segment.

Through March, only 33.7 percent of those who traded in an Explorer bought another Ford. "It's essentially funneling people  out of the brand," Libby said.

The Fusion's success is not enough to offset the Explorer's decline. Sales of the SUV are down 25.7 percent this year, or  about 12,000 vehicles, while Fusion demand is up about 10,000 units.

As drivers turn away from SUVs to more fuel-efficient models, Ford is struggling to realign its showroom to match consumer  tastes.

Enter the Edge, a midsize crossover launched in late 2006. Codina believes more people who traded in Explorers in the first  quarter would have stayed with Ford if all dealers had Edges to sell, but many had none until late February.

And with Edge sales of nearly 24,500 units through March, Ford could easily sell all 100,000 it plans to build this year.

Flex arrives in 2008

Codina said no single vehicle will change the game for Ford. Consumers have too many choices for one model to carry a brand  the way Taurus did in the 1980s.

But while Ford plans to refresh several products, it won't introduce another all-new vehicle until the Flex, a full size  crossover, reaches showrooms in 2008. Some analysts say the redesigned models look too much like their predecessors.

"If it doesn't look like a new product, people are going to cast it asid," Merkle said.

Analyst Jim Hall of AutoPacific Inc. in Southfield said Ford must better promote the vehicles it has.

"Age is only a problem if they're not selling because they're old," he said. "In many cases, Ford's products are not selling  because they never really tried to market them."

Codina said driving showroom traffic is his top priority. Ford is launching a more assertive advertising campaign to tout its  successes that spotlights products rather than the Ford brand, a move many dealers applaud.

"Part of the company's challenge right now is perception," said Doug North of North Brothers Ford in Westland. "We've had  some good news, but we haven't done a real good job of sharing it."

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